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Brazil’s capital markets are abuzz with behind-the-scenes activity as issuers talk to potential leads about bringing more than US$16bn worth of local and international supply in the coming months. But the tone remains cautious as issuers come to terms with wider rates and look to justify the higher costs vis-a-vis the duration of their investment programmes and their expected returns.

For now, only the biggest quasi-sovereign names dare tap as private-sector blue-chips - no matter how big they are - remain on the sidelines though the feeling is that this could change as soon as this month But key sticking points include limitations on volume and tenors. The crisis is particularly acute locally as traditional onshore markets – such as the debenture for private-sector market – is moribund at best.

It is amid this tricky backdrop that top issuers – media and oil giants Globo and Petrobras, national development bank BNDES and the Republic Of Brazil, key banks HSBC and JPMorgan, Bradesco, Itau BBA and Santander, and the country’s biggest pension fund Previ – convened at the IFR’s third ever Roundtable on Brazil to debate the biggest issues impacting the nation.

Talking at the offices of top law firm Demarest & Almeida advogados in Rio de Janeiro last month, participants largely agreed that today’s capital market, while temporarily a quasi-sovereign members only club, would pick up in activity by the second half of this year. Issuers like the BNDES still found local rates too expensive to stomach while Petrobras said it too was highly sensitive to cost, but agreed issuing a US$1.5bn 2019 made sense when taking in consideration the return on its investments stemming from the proceeds.

Is it all bad? Bankers at least agree conditions have improved since the end of last year. Markets have reopened and are accessible to those who are willing to pay a high enough rate to get a deal done, citing successes in the US high grade market as a reason to go. And while many bankers believe the first half of 2009 is not going to show a significant change, momentum is expected to build toward the end of the year, when refinancings are likely to be the order of the day.

Ultimately, the message was clear from bankers: go while you can and do not wait. Executives stressed that today’s market was at best uncertain and unpredictable and that issuers should not sit back and hold tight for a better moment. Bankers gloomily predicted that such a better moment may never come. The future looks more uncertain than ever.

There is a silver lining: Deputy Treasury Secretary Paulo Valle said the timing would be perfect for a debate on possibly lifting taxes on foreign investments in onshore private-sector corporate debenture transactions. Should that happen, the local market would transform overnight. Much-needed liquidity, sophistication and greater competition would be created in a market dominated by locals today.